1. Financial Institutions in Hong Kong
Group 9

2. Growth Enterprise Market (GEM)

3. Group Member William Choi Siu Ming 033161 Faith Lai Yuet Fai 033181
Mark
Cheung Sun Hei
033214
Kennix
Ngan Yan Yu
033230
Aurora
Wong Wun Ting
033233

4. Agenda Introduction of GEM The Difficulties of GEM Solutions
GEM vs NASDAQ
Value of GEM
Conclusion & Suggestion

5. Introduction What is GEM?
The Growth Enterprise Market (GEM) started operations on 15thNovember1999
The requirements of listing on the GEM are not as strict as Main Board of exchange
It is a bridge for potential company to grow to gradually obtain a listing on Main Board of exchange
At the end of February 2005, there were 205 companies listed on the GEM Board, with a total market capital of HK$65 billion

6. GEM VS MB Main Board GEM Board Operation Records 3 years 2 years
Profit requirement
30 million HKD for first two years
20 million HKD for the latest year
No lowest profit requirement
Profit Prediction
Not necessary, however, companies are encouraged to do so.
Not necessary

7. GEM VS MB Disclosure of information
Not allowed to disclose through web pages or any channel for instant message
Through the web pages provided by the HKEx
Minimum Public Float
50 million HKD or 25% of the issued shares
At least 30 million HKD and 20% of the issued shares
Underwriting
Must be underwritten
Not necessary

8. Problems of GEM Board Decreasing amount of Initial Public Offering
Year
Number of IPO
1999 7
2000 47
2001 57
2002
2003 27
2004 21
October 2005 8

9. Problems of GEM Board
The total amount of fund raised by IPO through GEM is also in a decreasing trend

10. Problems of GEM Board
Decreasing amount of turnover

11. Problems of GEM Board Low quality stocks
Some of these companies have moved to the Main Board already.
They are high quality stocks, and can pass the barriers of listing in the Main Board.
e.g. tom.com and SUNevision

12. Solutions Suggested by HKEx
Market maker
Higher standard for entering the Main Board
Improve the internal management and performance of companies

13. GEM vs NASDAQ What is NASDAQ?
The largest U.S. electronic stock market with approximately 3,200 companies
The world’s first electronic stock market
Many leading companies are listed on NASDAQ
E.g. Microsoft, Starbucks, Cisco, Intel

14. GEM vs NASDAQ Main difference between NASDAQ and GEM board
NASDAQ is an independent operation system whereas GEM is a subsidiary of the Main Board of Hong Kong
Independent operation means that NASDAQ has its own trading system, monitory system and list requirement
GEM is only a subsidiary which means it shares the same trading system, monitory system, standard and force. The difference is only the list requirement

15. GEM vs NASDAQ NASDAQ GEM Objective
NASDAQ
GEM
Objective
Companies related to technology and new established companies
For growing companies to raise money
Profit requirement
Income from continuing operation before tax over US$1M in the latest fiscal year or 2 of last fiscal years
No lowest profit requirement
Least Market Value
Not less than HK$46million when listed
US$50million
Sponsor Requirements
Recognized by Hong Kong Exchange
N/A

16. GEM vs NASDAQ NASDAQ GEM Financial Report
NASDAQ
GEM
Financial Report
Quarter, interim and annual report
Disclosure of price-sensitive events
Minimum Public Float
110 million shares with market not less then US$8 million
25% subject to a minimum of HK$30 million

17. Value of GEM Offers growth enterprises an avenue to raise capital
Offers investors an alternative of investing in "high growth, high risk" businesses
Foster the development of technology industries in Hong Kong and the region
Promotes the development of venture capital investments

18. Tom Online Also known as Tom.com Business including
Internet portal website
Wireless internet
Online advertising
SMS, MMS and WAP
IVR
VoIP

19. Tom Online

20. Tom Online
Top three ranking in every wireless value added service segment

21. TongRenTong Technology Co. Ltd.
Over 300-years-history traditional Chinese pharmacy
Modernized reform of traditional Chinese medicines
Promote modern Chinese medicine into the mainstream international pharmaceutical

22. TongRenTong Technology Co. Ltd.
Division distributed in USA, Canada, British, Australia and all across the South-East-Asia

23. Conclusion Investing in the GEM has high risk & low return
The investors are not willing to venture
There is a decrease in investment in the GEM, because of
insufficient monitoring system
the economic cycle

24. Conclusion
The GEM board deserves to be kept, because it provides companies
a way to raise capital
a stepping-stone to be listed on the Main Board
The GEM should increase its variety of industries
attract more investors
reduce the market risk
the HKEx should introduce
a more comprehensive member system
tighter regulatory framework and rule

25. Conclusion the GEM Board to operate more efficiently
differentiate from the Main Board
increase the competitiveness of the GEM
set up a comprehensive system
increase the variety of industries

26. The End
Thank You

27. Q&A
At least how much does a company need in Market capitalization at the time of listing on GEM
HK$20 million
HK$200 million
HK$200 billion
HK$200 trillion

28. The Growth Enterprise Market (GEM) started operations on
Q&A
The Growth Enterprise Market (GEM) started operations on
15thNovember1997
15thNovember1998
15thNovember1999
15thNovember2000

29. The turnover of GEM is Q&A Increased then decreasing now
Decreased then increasing now
Remain unchanged all the time
Decreased then remain unchanged